Poorvishah (accountant) (33 Points)
16 September 2011In an interior decorating firm,when business promotion expenses are claimed, can the cenvat credit of service tax ,if any at the rate of 3.09% be claimed against service tax charged at a rate of 10.3% to the clients.
U S Sharma
(glidor@gmail.com)
(21063 Points)
Replied 17 September 2011
query is not clear
business promotion is not an input services,
to get the input credit benefit the services should be qualifed as input sevices, which are used in providing taxable output services.
to discuss more, mention the nature of services you provide and exact place and nature of services you want to claim as input.
Poorvishah
(accountant)
(33 Points)
Replied 17 September 2011
Cenvat credit be claimed for expenses made,right?
Like Vat credit can be claimed when vat is paid under any accounting head
Likewise, can cenvat credit of service tax @ 3.09% be claimed if Service tax @ 10.3% is charged to clients.
Gautam Joshi
(Partner)
(361 Points)
Replied 20 September 2011
Hi Poorvi,
CENVAT Credit be cliamed on expenses but only for expenses made on "eligible services".
Eligible services are called "input services".
Input services has an inclusive list if you clarify exact descripttion of service on which 3.09% ST is paid and of which you want to claim CENVAT Credit then eligibility can be decided and not otherwise.
Warm Regards.
Poorvishah
(accountant)
(33 Points)
Replied 22 September 2011
Thanks a lot Gautam for your explanation,it is really helpfully.
The bills that i was talking about are basically hotel bills ie. business promotion expense.
Could you pls put further light on the matter.
Regards
Gautam Joshi
(Partner)
(361 Points)
Replied 22 September 2011
Hi Poorvi,
Business promotion expenditure are not specifically covered in the "input services".
However, you don't need to be dissapointed because of that. Main part of "Input Services" definition is the services (in your case hotel services) must be used by you for providing the output services (in your case interior decorator services).
If you can prove to the department that the business promotion expenditure actually used for providing interior decorator services then certainly you can take CENVAT Credit against the same. However, you must be ready to pool your sleves up to proove it by providing appropriate and adequent documents (e.g. invoice, payment granted by you etc.). Additionally, you also have to prove that the hotel services are not used for personal or your staff consumption as any service consumed personally or by staff; CENVAT Credit of the same can not be availed and utilised.
Hope you got your answer.
Warm Regards.
Poorvishah
(accountant)
(33 Points)
Replied 23 September 2011
Thanks a lot for the information.Queries solved now. 
CAclubindia
